Anti-Corruption Law opens room for self-regulation
Article in Zero Hora, on 20/02/2014, on the Anti-Corruption Law (Law 12,846/2013), the strict liability of companies, and the space for self-regulation.
Translated from the original.
The so-called Anti-Corruption Law (Law 12,846/2013) introduces new and intriguing challenges to the Brazilian constitutional system, especially in light of the provision for so-called “strict liability” of companies for acts of their employees or representatives that are harmful to the Public Administration, even if those companies have, in theory, adopted all the precautions necessary for good corporate governance.
As I have had the opportunity to argue in the book Administrative Sanctioning Law , even in relation to legal entities, the principle of fault-based liability derives from the right to due process and the prohibition of arbitrariness of public authorities, so that the courts will certainly not accept this kind of imposition of strict liability.
The greater purpose of this new Anti-Corruption Law cannot be to crush the private sector, but rather to prevent dishonest and improper practices. Hence the need for private companies to adopt “compliance” systems when entering into contracts with public administrations. That is, legal entities need to create internal mechanisms and procedures of integrity, auditing and effective application of codes of ethics and conduct, which will be fundamental to eliminating causation risks in relation to the infractions provided for both in Law 8,429/1992 (Administrative Probity) and in this Law 12,846/2013 (Anti-Corruption).
It is true that the compliance models required pass, in the legislator’s wording, through federal regulation, in order to have an impact on the “reduction of penalties,” and obviously this holds true in any sphere. However, in order to narrow the field of typicality, in the item of causal relationship (typical conduct), it should be noted that this kind of self-regulation can be highly relevant. Private companies have (and it is necessary to assess to what extent collective entities can take on this leading role) a potential role of self-regulation in this new context.
Drawing a parallel, when we wrote the book Capital Markets — Sanctioning Regime, co-authored with Alexandre Pinheiro dos Santos and Julya Sotto Mayor Wellisch, we argued that Anbima (Brazilian Association of Financial and Capital Markets Entities), in performing its functions as a private self-regulator, supervising the codes of regulation and best practices it devised, could impose penalties that could be taken into account by the Securities and Exchange Commission (CVM) in light of the principle of non bis in idem , according to which one cannot be convicted twice for the same offense; nor can a tax be levied twice on the same taxable event; nor should one fall into the same error once committed.
We said, on that occasion: “The agent may, for example, be adequately and promptly penalized by a self-regulatory institution, by a decision with an important and visible paradigmatic effect on the real estate market, and, by way of a commitment agreement, after all the discretionary analysis appropriate within the CVM, manage to obtain an arrangement that rules out the possibility of any additional penalty by the Agency, in view of the postulate of proportionality and of an institutional understanding, in the concrete case, that even the effects of any possible new sanction would already have been fully achieved by timely and effective self-regulatory action, ruling out, at least from then on, just cause for a new sanctioning action, given, moreover, the cost-benefit ratio of the punitive proceeding.”
Thus, a new space for action opens for self-regulatory models, in light of Law 12,846/2013, which may be the subject of deeper reflection, avoiding the multiplication of punitive proceedings without just cause, devoid of reasonableness or proportionality, and achieving the legislator’s primary purpose, which seeks to prevent poor public management and to strengthen corporate probity. A completely new challenge, certainly, and perhaps not even imagined in its essence and in all its potential developments, but necessary on the agenda of intellectual and pragmatic output of Brazilian institutions.
Fábio Medina Osório is a lawyer, holds a doctorate in Administrative Law from the Complutense University of Madrid, and is president of the International Institute of State Law Studies (IIEDE).